Informist, Monday, Jul. 14, 2025

NEW DELHI – Indian exporters can increase their market share in the US thanks to the relative tariff advantage compared with major competitors, according to NITI Aayog. India can expand share in the US market, especially in sectors such as pharmaceuticals, textiles, and electrical machinery, the government's top think tank said in a report released Monday.

"While India's average tariff exposure remains moderate, this policy shift presents a unique strategic opportunity for Indian exporters," NITI Aayog said in its Trade Watch quarterly report for Oct-Dec. In April, US President Donald Trump had announced a 26% tariff on imports from India along with other trading partners. The US later paused its reciprocal tariffs till Jul. 9, a deadline which has now been extended till Aug. 1.

Since April, the US has signed trade deals with a few countries such as the UK, and is in talks with India for a bilateral trade agreement. Trump has also announced fresh tariffs on some trading partners over the last week, including a 30% levy on imports from the European Union.

According to NITI Aayog, India is well positioned to gain market share in a significant portion of its exports to the US. At the Harmonized System-2 level, a global product classification system, India can gain competitiveness in 22 of the top 30 product categories, the report said. This covers 61% of India's exports to the US and 68% of total US imports.

India has a tariff edge over China, Mexico, and Canada in key Harmonized System-2 sectors, such as nuclear reactors, iron and steel, textiles, electricals, and vehicles, NITI Aayog said. Similarly, at the Harmonized System-4 level, India enjoys a favourable tariff differential in 78 of the top 100 products, accounting for around 52% of its exports to the US, the report said.

"India must pursue complementary policy measures to capitalise these advantages, including targeted export promotion, deeper integration into global value chains, and a services-focused trade agreement with the US building institutional frameworks around digital trade, cross-border data flows, and mutual recognition agreements can expand India's services footprint further," the report said.

India has a disadvantage of only 1% in sectors where it faces slightly higher tariffs. This, the report said, suggests India remains broadly competitive.

In 2024, India's bilateral merchandise trade with the US reached $123.8 billion. India had a trade surplus of $37.7 billion with the US last year. The US also remains India's largest export market, accounting for 18.3% of total exports.

"Overall, the United States has emerged as a central pillar in India's export strategy, accounting for nearly one-fifth of total exports and offering deep market access across high-value and labour-intensive sectors," the report said. "The diversity of India's export basket from advanced electronics and pharmaceuticals to textiles and apparel, reflects the maturity and potential of this bilateral trade relationship." End

US$1 = INR 85.99

Reported by Shubham Rana

Edited by Vandana Hingorani

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